nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒03‒05
nineteen papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Knowledge Spillovers and their Impact on Innovation Success - A New Approach Using Patent Backward Citations By Spyros Arvanitis; Florian Seliger; Martin Wörter
  2. Government and Governance of Regional Triple Helix Interactions By Danson, Michael; Todeva, Emanuela
  3. Entrepreneurial Experimentation: A Key Function in Entrepreneurial Systems of Innovation By Lindholm-Dahlstrand, Åsa; Andersson, Martin; Carlsson, Bo
  4. Firm Entry and Exit and Aggregate Growth By Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
  5. Technology-Skill Complementarity in Early Phases of Industrialization By Raphaël Franck; Oded Galor
  6. Development and Utilization of Energy-related Technologies, Economic Performance and the Role of Policy Instruments By Spyros Arvanitis; Michael Peneder; Christian Rammer; Tobias Stucki; Martin Wörter
  7. Antitrust, Patents, and Cumulative Innovation: Evidence from Bell Labs By Nagler, Markus; Watzinger, Martin; Fackler, Thomas; Schnitzer, Monika
  8. Migration, Labor Tasks and Production Structure in Europe By Stefania Borelli; Giuseppe De Arcangelis; Majlinda Joxhe
  9. The impact of open innovation on employee mobility and entrepreneurship By Simeth, Markus; Mohammadi, Ali
  10. What determines international and inter-sectoral knowledge flows? The impact of absorptive capacity, technological distance and spillovers By Florian Seliger
  11. What Do We Really Know about Offshoring? Industries and Countries in Global Production Sharing By Gordon H. Hanson
  12. Trade and the Size Distribution of Firms: Evidence from the German Empire. By Biermann, Marcus
  13. Efficiency, innovation, and imported inputs: determinants of export performance among Indian manufacturing firms By Marco Grazzi; Nanditha Mathew; Daniele Moschella
  14. Do Technology Transfer and IPR Spur Domestic Innovation?: An International Panel Data Analysis By Demir, Caner
  15. Agricultural Diversity, Structural Change and Long-run Development: Evidence from the U.S. By Martin Fiszbein
  16. A method for estimating global trade in value added within agriculture and food value chains By Jared Greenville; Kentaro Kawasaki; Raphaël Beaujeu
  17. Why Does the Productivity of Investment Vary Across Countries? By Kevin S. Nell; A.P. Thirlwall
  18. The changing distribution of firms and workers across cities By Diego Puga
  19. The Economics of Patent Backlog By Zaby, Alexandra Karin; de Rassenfosse, Gaétan

  1. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Florian Seliger (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: We propose a new patent-based measure of knowledge spillovers that calculates technological proximity based on firms that were identified via patent backward citations links. We argue that this measure has a couple of advantages as compared to the 'standard' measure proposed by Jaffe: First, it reflects spillovers from both domestic and foreign technologically 'relevant' firms, second, it is more precise because it only takes into account knowledge relations with technologically 'relevant' firms. Our empirical results indeed show that the measure performs better than the standard measure in an innovation model. We find - for a representative sample of Swiss firms - that knowledge spillovers measured in this way have a positive and significant impact on innovation success. However, the knowledge spillovers appear to be localized: Spillovers from geographically distant areas such as the USA and Japan matter less than spillovers from near destinations such as Europe and particularly Switzerland itself. Moreover, the spillover effect on innovation performance decreases with increasing number of competitors on the main product market so that this effect would appear only in niche markets or oligopolistic market structures. However, an additional effect of competition can only be detected for more radical innovation success.
    Keywords: Knowledge Spillovers, Innovation Success, Knowledge Capital, Patent Citations, Competition
    Date: 2016–10
  2. By: Danson, Michael; Todeva, Emanuela
    Abstract: This conceptual paper contributes to the discussion on the role of regional government and regional triple helix constellations driving economic development and growth within regional boundaries. We investigate the impact of regionalism and subsidiarity on regional triple helix constellations and the questions of governmentality, governance and institutional development at regional level. We put emphasis on the fact that the position of regional authorities in the structure of government and policy boundaries are best implemented at a regional level (the principles of regionalism and subsidiarity), and that localised policy practices represent a more precise view on the government-industry-university interactions (the principle of governmentality). We look at the regional triple helix context as a prerequisite for stakeholder engagement, enhancing innovation capabilities and entrepreneurial behaviour. The paper identifies the drivers behind regional competitiveness and economic development, and investigates the positive externalities from strong triple helix constellations, as well as the impact of government support and institutionalised cooperation on value creation and value capture at the level of the locale. The paper offers a stylized model (Fig. 1) of the conditions for value creation and value capture and offers a critical overview of the debates around the rationale for regional governments. Examples are drawn from Scotland, England and some comparable parts of Europe.
    Keywords: regional development agencies; triple helix; regional governance; public policy; regional economic development
    JEL: H7 L0
    Date: 2016
  3. By: Lindholm-Dahlstrand, Åsa (CIRCLE); Andersson, Martin (Department of Industrial Economics); Carlsson, Bo (Department of Economics)
    Abstract: There is a need for a conceptual approach that, with reference to explicit micro-level mechanisms and processes of industrial dynamics, articulates the role and function of entrepreneurial experimentation in innovation systems. This paper develops the concept of ‘entrepreneurial systems of innovation’ to address this gap in the literature. We argue that entrepreneurial experimentation comprises both ‘technical’ and ‘market’ experimentation, and that entrepreneurship must be conceptualized in terms of its function in innovation systems rather than as an outcome. At the systems level, the central function of entrepreneurial experimentation is to foster creation, selection and scaling-up of innovations. Spinoffs and acquisitions are proposed as examples of micro-mechanisms that give rise to system-wide entrepreneurial experimentation. Interaction between established organizations and new innovative entrants, through spinoffs and acquisitions, is an important characteristic of vibrant entrepreneurial systems of innovation.
    Keywords: Entrepreneurship; Experimentation; Innovation systems; New technology-based firms; Entrepreneurial systems of innovation; Scaling up; Growth
    JEL: L22 L26 O31 O33
    Date: 2017–02–23
  4. By: Jose Asturias; Sewon Hur; Timothy J. Kehoe; Kim J. Ruhl
    Abstract: Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm’s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. Firm turnover is crucial for rapid productivity growth.
    JEL: E22 O10 O38 O47
    Date: 2017–02
  5. By: Raphaël Franck; Oded Galor
    Abstract: The research explores the effect of industrialization on human capital formation. Exploiting exogenous regional variations in the adoption of steam engines across France, the study establishes that, in contrast to conventional wisdom that views early industrialization as a predominantly deskilling process, the industrial revolution was conducive for human capital formation, generating wide-ranging gains in literacy rates and educational attainment.
    JEL: N33 N34 O14 O33
    Date: 2017–02
  6. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Michael Peneder (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Christian Rammer (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Wörter (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: The present study investigates the effects of energy-related technologies on economic performance at firm level. We distinguish clearly between adoption and use of energy-related technologies (process innovation in the broad sense) and product innovation in energy-related fields. We take into consideration four energy-related policy instruments (and expected demand for energy-related new products and services). We investigate the possibility of indirect effects of policy on performance via adoption or innovation by interacting adoption and innovation variables with policy instrument dummies. We test our hypotheses not only for the pooled data but also separately for the three countries (Austria, Germany, Switzerland) that are taken into consideration in this study. We find a positive direct effect of investment expenditures for energy-related technologies on labour productivity and a positive indirect effect of energy taxes via investment in energy-related technologies. We find neither direct nor indirect effects of product innovation in energy-related products on labour productivity. No differences among the three countries could be detected.
    Keywords: Use of energy-related technologies, Energy-related innovation, Policy instruments, Productivity
    Date: 2016–11
  7. By: Nagler, Markus; Watzinger, Martin; Fackler, Thomas; Schnitzer, Monika
    Abstract: How large is the impact of intellectual property on cumulative innovation in electronics, computers and communications? Following an antitrust lawsuit against Western Electric and AT&T, Bell Labs had to license all patents published by 1956 for free. We find that this removal of patent rights increased subsequent citations to Bell’s patents by 7%. Patenting in affected patent subclasses increased by 17%. The effect comes from young and small firms in fields in which Bell did not remain commercially active. Placebo regressions support the identification assumption of parallel trends in citations.
    JEL: O31 O33 L43
    Date: 2016
  8. By: Stefania Borelli (Sapienza University of Rome); Giuseppe De Arcangelis (Sapienza University of Rome); Majlinda Joxhe (CREA, Université du Luxembourg)
    Abstract: This paper assesses the effect of the immigration on the production structure in a selection of European countries in 2001-2009 with a task-based approach. The inflow of immigrants represents an increase in the relative supply of manual-physical (or simple) tasks, hence favoring simple-task intensive sectors. We use a new OECD dataset, PIAAC, to calculate the index of simple-task intensity at the country-industry level. The analysis confirms that the increase in migration stocks caused a positive impact on the value added of sectors that use more intensively simple tasks. These effects are more intense when considering countries as Italy and Spain characterized by a recent, rapid and intense inflow of migrants. Endogeneity issues are discussed and instruments based on a gravity approach are used in estimation.
    Keywords: Rybczynski Effect, International Migration, PIAAC, Gravity Equation
    JEL: F22 C25
    Date: 2017
  9. By: Simeth, Markus (Universidad Carlos III de Madrid (UC3M)); Mohammadi, Ali (Royal Institute of Technology (KTH), Centre of Excellence for Science and Innovation Studies (CESIS) & Swedish House of finance)
    Abstract: Prior research shows that firms can increase their innovation performance by leveraging external sources of knowledge. However, insights related to potential drawbacks of open collaborative approaches for innovation remain scarce. In this paper, we investigate the relationship between R&D collaboration and the departure of skilled employees. Highly qualified scientists and engineers who interact with external partners in the context of R&D collaborations may increase their outside options, resulting in higher rates of employee mobility to other firms and employee entrepreneurship. We analyze our research question using data from the Swedish edition of the Community Innovation (CIS) survey combined with employer-employee register data. Our econometric analysis suggests that a stronger use of research collaborations by firms leads to an increasing number of employee departures. Moreover, we detect heterogeneity for this relationship with respect to the types of employee exits and different collaboration partners.
    Keywords: R&D employees; Open Innovation; R&D Collaboration; Employee mobility; Employee Entrepreneurship
    JEL: J62 O32
    Date: 2017–03–01
  10. By: Florian Seliger (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: This paper studies determinants of knowledge flows as measured with patent forward citations that occur between 'input' and 'output sector-countries'. We look at the impact of absorptive capacity of a focal sector-country, knowledge spillovers and technological distance between sector-countries on further knowledge flows. For this purpose, we develop a knowledge flow matrix similar to input-output tables in trade where patent citations capture knowledge flows that go from the input sector-country to the output sector-country. We estimate a gravity model with variables that capture technological distance and knowledge that comes from either inside the input output pair or from external spillover sources. Our results indicate that knowledge accumulated in the output sector-country and - in some cases - external spillovers are key in generating further knowledge flows that go to the output sector-country. A distinction between high-tech and low-tech sector-countries shows that spillovers are more useful for the generation of knowledge flows if the input sector-country is low-tech. Low-tech sector-countries benefit from both high-tech knowledge from the output sector-country and external knowledge from the technological frontier. In contrast, knowledge flows based on high-tech sector-countries cannot benefit from low-tech sector-countries and only to a very limited extent from other high-tech sources. Technological distance between sector-countries has a negative impact on further knowledge flows so that only technologically proximate sector-countries are more likely to generate knowledge flows.
    Keywords: Knowledge flows, Patent citations, Spillovers, Absorptive capacity, Gravity model
    Date: 2016–10
  11. By: Gordon H. Hanson (UC San Diego and NBER)
    Abstract: Theories of offshoring model how firms divide production stages across borders. Empirical work on the phenomenon has long been hampered by a paucity of cross-country data on special- ization within industries. In standard trade sources, we observe ows of goods between countries at the product level, but not the specific tasks that countries perform in manufacturing these products. The literature has consequently developed an inventive arsenal of indirect measures of industry fragmentation. In this paper, I turn to data on trade in assembly services a labor- intensive task that typically occurs at the end of the production chain to document which industries and countries are engaged in this common form of global production sharing. Trade in assembly services is prominent in just a handful of sectors, including apparel, electronics, footwear, furniture, toys, and transportation equipment. Data for the United States prior to the post-1980 growth in trade with developing countries reveal that most oshoring industries are relatively intensive in the employment of very low-wage labor, exhibit relatively wide variation in the wages paid to their employees, and use capital relatively unintensively. These industries tend to be less likely to hire workers in occupations that are intensive in routine tasks. Offshoring thus appears to be most prominent in sectors for which firms have a strong incentive to divide production between high-wage and low-wage countries and in which the automation of routinized jobs oer few opportunities to reduce labor intensity. Countries that specialize in manufacturing tend to cycle through offshoring industries as they accumulate capital, starting out in apparel, footwear, and toys and later moving into electronics and electrical machinery. These industry dynamics are most pronounced in labor-abundant East Asia. They are not present in the resource-abundant countries that specialize in primary commodities.
    Date: 2017–02–21
  12. By: Biermann, Marcus
    Abstract: What is the effect of trade on the size distribution of firms? We collect historical data between 1882 and 1907 from the German Empire to address this question. Our data allow us to match three data sets according to the same geographic boundaries: industry census data, railway trade data and waterway trade data. The key finding is that trade liberalization impacts the firm size distribution heterogeneously across three size categories. We find evidence of a stark shift in employment share from small and medium firms towards larger firms and from small firms towards medium and large firms in firm share. A “Bartik” instrument is proposed to argue that the correlations described are indeed causal. A model of intra-industry trade sheds light on the economic mechanism at play. Comparative statics reveal that further economic integration captured by a fall in transport costs increases average firm size.
    JEL: F12 F15 F14
    Date: 2016
  13. By: Marco Grazzi; Nanditha Mathew; Daniele Moschella
    Abstract: This paper investigates the determinants of export behavior among Indian manufacturing firms, focusing in particular on the role of technology, cost and imported intermediate inputs. Our evidence suggests that innovation, in particular R&D, positively affects both firmsù probability to export and firmsù export volumes. We also find that imported intermediate inputs, incorporating foreign technology, play an important role in expanding export activities of firms. On the other hand, we find that higher productivity or lower unit labour costs are not systematically associated with the probability to enter export market, but they do positively affect export volumes.
    Keywords: Export behavior, Innovation, Imported Inputs, Trade policy, India
    Date: 2017–02–28
  14. By: Demir, Caner
    Abstract: The study investigates whether raising technology transfer and strengthening the intellectual property rights (IPR) regime trigger domestic innovation by employing a panel data analysis for 58 developed and developing countries in the 1960-2010 period. Since theoretical and empirical literature has proved that innovation and technology were the prominent drivers of development process, analyzing the determinants of these factors have become crucial. Due to the globalization process, knowledge spreads faster than any other social and economic indicators; which makes the interactions between the types of knowledge more important. Thus, the study analyzes the impacts of foreign patents (as a proxy for technology transfer) and IPR on domestic innovation. According to the empirical analysis, it is found that technology transfer triggers domestic innovation both in developed and developing world. Contrary, it is also found that intellectual property protection is a detrimental factor for domestic innovation in mid income group while it bears fruit in high income group.
    Keywords: Innovation, technology transfer, intellectual property rights, patents.
    JEL: O31 O34
    Date: 2016–12–15
  15. By: Martin Fiszbein
    Abstract: This paper examines the role of agricultural diversity in the process of development. Using data from U.S. counties and exploiting climate-induced variation in agricultural production patterns, I show that mid-19th century agricultural diversity had positive long-run effects on population density and income per capita. Examining the effects on development outcomes over time, I find that early agricultural diversity fostered structural change during the Second Industrial Revolution. Besides stimulating industrialization, agricultural diversity boosted manufacturing diversification, patent activity, and new labor skills, as well as knowledge- and skill-intensive industries. These results are consistent with the hypothesis that diversity spurs the acquisition of new ideas and new skills because of the presence of cross-sector spillovers and complementarities.
    JEL: N11 N12 N51 O13 O14
    Date: 2017–02
  16. By: Jared Greenville; Kentaro Kawasaki (OECD); Raphaël Beaujeu
    Abstract: Global Value Chains (GVCs) have transformed production across a broad range of goods and services worldwide. Although the development of GVCs has occurred in agro-food sectors alongside other sectors, less is known about the trade that occurs within agro-food GVCs due to limited information on flows of trade in value added. This study develops an approach to calculate disaggregated indicators of GVC participation in agro-food sectors in both developed and developing countries. Specifically, the approach exploits the Global Trade Analysis Project (GTAP) database to construct an inter-country input-output (ICIO) table for the year 2011. The resulting ICIO is used to compute indicators of GVC participation based on the concept of vertical specialisation – forward and backward participation – across 20 agro-food sectors in 70 countries and/or regions. Estimates of domestic value added in exports and final demand or agro-food products, including the contribution of all industries, are also presented.
    Keywords: agriculture, global value chains, GTAP, multi-regional input output
    JEL: F14 F60 Q17
    Date: 2017–02–27
  17. By: Kevin S. Nell; A.P. Thirlwall
    Abstract: A country's growth of output is identically equal to its ratio of investment to output and the productivity of investment. In 'new' growth theory regressions, which include the investment ratio, all other included variables pick up why the productivity of investment differs between countries. This paper converts a 'new' growth theory regression equation into productivity of investment equation which allows for the direct testing of the diminishing returns to capital hypothesis of neoclassical growth theory, and to identify the major determinants of differences in the productivity of investment using the general-to-specific model selection algorithm - Autometrics. Nineteen explanatory variables are considered, and export growth, property rights, latitude, and education turn out to be the most important. Eighty-four countries are taken over the period 1980-2011. There is no evidence of diminishing returns to capital across countries, so investment matters for long run growth.
    Keywords: 'new' growth theory; productivity of investment; cross-country growth regressions
    Date: 2017–03
  18. By: Diego Puga (CEMFI and CEPR)
    Abstract: This paper explores the changing distribution of firms and workers across cities. Cities have become increasingly specialized by function rather than sector, with business services, management and innovation concentrating in large urban areas and manufacturing dispersing across smaller cities instead. Big cities attract more educated workers, but the main factor distinguishing big cities is not so much who goes there but what happens to them as a result: locating in a big city allows firms to become more productive and workers to increase their earnings. And yet, as cities have become more different, they have also become more interdependent with important life-cycle patterns emerging. Many new firms and products start up in big diverse cities but eventually relocate, making up space for the next generation of new firms and products. Workers are often willing to pay the higher living cost of bigger cities not just to get higher wages today, but in the hope of learning and acquiring skills that, depending on their own characteristics and luck, they may exploit there or somewhere else.
    Keywords: cities, heterogeneity
    JEL: R14
    Date: 2017–02–21
  19. By: Zaby, Alexandra Karin; de Rassenfosse, Gaétan
    Abstract: Patent offices around the world face massive backlogs of applications, which threatens to slow down the pace of technological progress. However, economists lack analytical tools to address the issue. This paper provides a model of patent backlog inspired from the traffic congestion literature. Inventors in the cohort are heterogeneous with respect to desired patent pendency duration and react in anticipation of the waiting time resulting from the backlog. They can accelerate or slow down pendency duration by adapting their filing strategy. We find that the backlog impedes patent examination progress by providing incentives to strategically manipulate pendency. We discuss four policy responses: increasing examination capacity; introducing a penalty fee; altering the value of pending applications; and allowing deferred examination.
    JEL: O34 R48 O38
    Date: 2016

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